The situation in the Middle East remains tense, and the market is highly concerned about the exposure of major banks in this region. HSBC and Standard Chartered PLC have significant exposure in the Middle East, while the direct exposure of the three major local banks is expected to be relatively low.
Despite the limited direct risks for local banks, analysts point out that the situation in the Middle East may still have significant indirect impacts on them. As Asia's leading wealth management center, Singapore's financial industry is highly influenced by global risk sentiment.
In terms of direct exposure, DBS Group established a branch in the Dubai International Financial Centre in March 2006; OCBC Bank conducts business in Dubai through its private banking arm, Singapore Bank; UOB's main business is in ASEAN, with minimal exposure in the Middle East.
A spokesperson for DBS Group revealed that its direct exposure to the Middle East is limited and mainly concentrated in high-quality investment assets. The bank is paying attention to the potential secondary impacts brought by the situation in the Middle East, including rising energy prices and supply chain disruptions, as well as the effects of these factors on clients.
Singapore Bank has increased its presence in the Middle East in recent years. The bank established an office in Dubai as early as 1996 and obtained a license in November 2016 to provide comprehensive private banking services in the Dubai International Financial Centre, including investment, credit, and wealth planning consulting services, primarily serving the Middle East and European markets.
A spokesperson for Singapore Bank stated in response to inquiries from Lianhe Zaobao: &#34;Although the current situation remains challenging, at this stage, we have not seen an increase in client inquiries regarding investments and portfolio allocation. Clients' investment portfolios are highly diversified, and they are cautiously monitoring market developments while remaining on the sidelines for now.&#34;
<h3>Analysis: Ongoing Middle East Conflict May Pose Risks to Local Banks' Asset Quality</h3>
When asked about the impact of the Middle East situation on local banks, Bloomberg Industry Research analyst Guo Shuning pointed out that the more important factor is the indirect impact. As Asia's leading wealth management center, Singapore is particularly sensitive to global risk sentiment. Additionally, Singapore relies almost entirely on imported energy, and if the conflict in the Middle East continues, it may affect local inflation levels and corporate costs
This may pose a risk to the asset quality of local banks.
Gao Yuanhui, a research analyst in the Research and Portfolio Management Department of FSM Global, also believes that the impact of the Middle East crisis on local banks mainly occurs through macroeconomic channels rather than direct credit exposure.
In addition, geopolitical uncertainty may lead some Middle Eastern clients to postpone investment decisions in the short term. On the other hand, Singapore's reputation as a safe-haven financial center has also attracted a large inflow of capital. If tensions escalate further, it may accelerate the inflow of funds into local banks.
<h4>Further Reading</h4>
Long-term government bonds around the world fall together as investors worry about the cost of war in Iran

 Middle Eastern conflicts force Asia's super-rich to reassess investment risks in Dubai 


Among the banks tracked by JP Morgan analysts, Standard Chartered has a higher exposure to the Middle East, and its stock price may experience a more significant decline.
By 2025, the exposure from the UAE accounted for 2.5% and 5.6% of Standard Chartered's total loans and income, respectively.
However, as of the second quarter of 2025, about 73% of Standard Chartered's loan clients are governments, public institutions, or banks, so credit risk remains manageable.
As of the end of 2025, HSBC's exposure to the Middle East accounted for 2%, 2.3%, and 3.8% of the group's total assets, loans, and income, respectively. Among these, 68% of the loan clients are corporate clients, 13% are non-bank financial institutions, and 19% are retail loans, most of which are mortgages.
<h3>HSBC remains confident in the development prospects of the Middle East</h3>
Regarding whether it will reassess its Middle East business, a spokesperson for HSBC stated, &#34;We remain confident in the Gulf Cooperation Council (GCC) region, as well as its long-term strength, resilience, and development prospects. Our view on the region's fundamentals and future potential has not changed.&#34;
For many Asian banks, the Middle East was once seen as a key growth engine for driving business, but optimism is waning as conflicts in the region escalate.
According to Bloomberg on Thursday (March 12), discussions at the Asia-Pacific Loan Market Association meeting held in Hong Kong this week focused on how the conflict in Iran has shaken market enthusiasm for the Middle East. Several banking professionals noted that they are reassessing their expansion plans in the Persian Gulf and carefully weighing the risks posed by this conflict.
Insiders revealed that several global banks, including HSBC and Standard Chartered, have notified some Middle Eastern clients that transactions involving Asian balance sheets will be put on hold. A major bank in Singapore has shelved its planned expansion in the Middle East for this year; the bank's Hong Kong team had met with clients in Dubai in February but has now been instructed to pause related discussions

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The situation in the Middle East is tense, and the market is paying attention to HSBC and Standard Chartered PLC's significant exposure in the region. Although the direct exposure of the three major local banks is relatively low, analysts warn of potential indirect impacts. The Singapore financial industry is influenced by global risk sentiment, with DBS Group having limited direct exposure in the Middle East, primarily focused on high-quality investment assets. Banks are concerned about secondary effects such as rising energy prices and supply chain disruptions that may arise from the situation in the Middle East. Singaporean banks are gradually increasing their presence in the Middle East, but customer inquiries about investments have not yet increased

- The ongoing tensions in the Middle East are raising concerns about significant exposure for banks like HSBC and Standard Chartered in the region, while local banks have more limited direct risks.  
- Analysts warn that the indirect impacts, such as rising energy prices and supply chain disruptions, could affect the asset quality of local banks, particularly in Singapore, which is sensitive to global risk sentiments.  
- Although some banks are reassessing their expansion plans in the Middle East due to escalating conflicts, Singapore’s reputation as a safe financial hub may attract capital inflow.

HSBC and Standard Chartered PLC's exposure in the Middle East is significant, with local banks indirectly impacted by the situation | Lianhe Zaobao